Sistem Jaringan Bisnis International Teori Network
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Business Network
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The Body of Knowledge on International Business Studies
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"Globalisation requires new relationships both across companies and
in companies. To compete effectively in the global economy, companies
must strengthen their internal unity as well as become more adept at
external learning“ - (Kanter, 1994) sets of two or more connected exchange a network involves “ relationships”
- Axelsson and Easton (1992)
a specific type of Mitchell (1969) defined networks as “ relations linking a defined set of persons, objects and events
” Holmlund & Kock, (1998, p. 48) di dalam Bridget C Kenny (2009)
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a pattern of Nooteboom (1999) defined a network as
more or less lasting linkages between firms or divisions
within firms (departments, subsidiaries).Vertical Integration/ Supply Chain ? Three types of linkages:
constituting flows of products (goods or services) from Vertical – suppliers to users, in intra-firm value chains or inter-firm value systems (Porter 1985); where similar, competing products (substitutes in
- consumption) are pooled to share a common resource of production or distribution, in a scale strategy; or diversified, where dissimilar products, which may be
Horizontal
Diagonal – complimentary in research, marketing, or distribution, are pooled to share a common resource.
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Theories of Network Development Processes Bridget C Kenny (2009)
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Main approaches to firm-level internationalisation Wach, (2012 di dalam Wach dan Wehrmann (2014)
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Zucchella & Sciabini (2007) di dalam Wach & Wehrmann (2014)
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The Network Model of Internationalization
Richard D Hadley and Heather I M Wilson
The (Johanson and Mattsson, 1988) network model of internationalisation
allows for the influence of external actors or organisations on the internationalisation of
the firm. Comprising two dimensions, the degree of internationalisation of the firm
and the degree of internationalisation of the market , the network model enlarges on
the process model by allowing for multilateral influences on the international decision
making of the firm.
The Early Starter firm possesses a low degree of internationalisation, with its network
sharing this characteristic has a low degree of internationalisation, but is positioned in a highly The Late Starter internationalised market.Although resides in an internationally inexperienced the Lonely International firm network, its greater degree of commitment to the internationalisation process, as reflected by its relatively high degree of internationalisation
The International among Others firm as enjoying a high degree of internationalisation.
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Internationalization process and the role of business networks and learning in it (Meyer, Skak 2002) di dalam Marge Seppo (2007), The Role of Business Networks in The Internationalization …
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Internationalization of the focal firm by establishing new business network or through existing network (Marge Seppo, 2007) Pengukuran Variabel? Foreign Sales as Percentage of Total Sales Foreign Employees as Percentage of Total Employees The number of countries in which the firm operates. Foreign Owners as Percentage of Total Ownership The number of listings in foreign stock exchanges
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Ease of Doing Business Index
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DOING BUSINESS 2012
INDONESIA Source: www.doingbusiness.org
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Source: www.doingbusiness.org © 2012 The World Bank
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Best practices in Indonesia compared internationally
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Starting a business Where is it easy to start a business?
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Time and cost to start a business in Indonesia —fastest in Gorontalo and Palangka Raya; cheapest in Pontianak
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It is easier to start a business now in all 14 cities benchmarked since 2010
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Regionally, big cuts in the time and procedures to start a business since 2010
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The company registry is the information exchange hub for business and government A COPUBLICATION OF THE WORLD BANK AND THE INTERNATIONAL FINANCE CORPORATION John R. Wille, Karim O. Belayachi, Numa de Magalhaes, Frederic Meunier`(2011) di dalam
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Dealing with construction permits
What are the time, cost and number of procedures to comply with formalities to build a warehouse?
Procedures, time and cost to deal with construction permits
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Registering property
What are the time, cost and number of procedures required to transfer property between 2 local companies? Where is it easy to register property
—and where not?
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Foreign Direct Investment World Investment Report United Nations Conference on Trade and Development
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Global FDI inflows Top 20 host economies, 2009 and 2010 (Billions of dollars)
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Global FDI outflows, Top
(Billions of dollars) 2012?
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Top host economies for FDI in 2011 –2013
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Case Study
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Harrigan’s Generic Vertical Integration Strategies (1985) Vertical Integration/ Supply Chain ?
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Convergence Media Value Chain Sumber: Wirtz (2001) di dalam Fiona Röder (2007)
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Organizational Structure and International Revenue
Sumber: Fiona Röder (2007)Sistem Jaringan Bisnis International
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Model of International Managerial Competitiveness Customers' Views of Australian Management: Asian-Pacific Viewpoints, Curtin University
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Cultural Grouping and Management Style
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Hofstede’s Cultural Value Scores for 30 Selected Cultures National Cultural Differences and Multinational Business National Cultural Differences and Multinational Business. Pankaj Ghemawat and Sebastian Reiche
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East European Business Networks
The dependency of firms on government The adjustment behaviour of decision firms during the transition is pre-determined by the macro-economic
The dependency of firms on inter-firm, inter- conditions, the position and intra-industry linkages that each firm occupies in a particular industry, and its
Professional and political networks control over the value chain.
Intra-firm dependencies The accumulation of resources Uncertainty of resources
Strategic behaviour
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Business Networks Based on Transformed Dependencies
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New Established Business Networks
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Chinese Business Network in Southeast Asian Markets The Nordic and Chinese business network models contrasted
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The New Global Challengers The Boston Consulting Group (2006)
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The RDE 100 Emerging Global Challengers
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Multinational Corporation
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What ‘s Senior Executive Speak? Company A
We are multinational firm. We distributed our product in about 100 countries. We manufacture in over 17 countries and do research and development in three countries. We look at all new investment project
- – both domestic or overseas – using exactly the same criteria.
Company B
We are multinational firm. Only 1% of the personnel in our affiliate companies are non- nationals. Most of these are US executives on temporary assignments. In all major market, the affiliate’s managing director is of the local nationality.
Company C
We are multinational firm. Our product division executives have worldwide profit responsibility. As our organizational chart shows, the United States is just one region on a par with Europe, Latin America, Africa, etc. in each product division.
Company D (non-american)
We are multinational firm. We have at least 18 nationalities represented at our headquarters. Most senior executive speak at least two languages. About 30% of our staff at headquarters are foreigners.
Dikutip dari Howard V. Perlmutter (2001)
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MNC? MNC is a parent company that :
An enterprise operating in several countries but managed from one (home) country
www.businessdictionary.com
1. Engages in foreign production through its affiliates located in several countries,
2. Exercises direct control over the policies of its affiliates,
3. Implements business strategies in production, marketing, finance and staffing that transcend national boundaries ( geocentric ).
Franklin Root (1994)
A corporation that has its facilities and other assets in at least one country other than its home country
www.investopedia.com
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Three Stages of Evolution
- initial inquiries => firms rely on export agents
- expansion of export sales
- further expansion þ foreign sales branch or assembly operations (to save transport cost)
is usually first experience (because it is easy)
Licensing
e.g.: Kentucky Fried Chicken in the U.K. it does not require any capital expenditure ; it is not risky ; payment = a fixed % of sales the mother firm cannot exercise any over the licensee (it is managerial control independent) The licensee may transfer industrial secrets to another independent firm, thereby creating a rival.
Direct Investment requires because it is a critical step. the decision of top management it is risky (lack of information); plants are established in several countries ; licensing is switched from independent producers to its subsidiaries; export continues
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The company becomes a multinational enterprise when it begins to plan,
organize and coordinate production, marketing, R&D, financing, and staffing. For each of these operations, the firm must find the best location.
Rule of Thumb
A company whose foreign sales are 25% or more of total sales. This ratio is high for small countries, but low for large countries, e.g. Nestle (98%: Dutch), Phillips (94%: Swiss).
Examples: Manufacturing MNCs 24 of top fifty firms are located in the U.S. 9 in Japan 6 in Germany. Petroleum companies: 6/10 located in the U.S. Food/Restaurant Chains. 10/10 in the U.S. US Multinational Corporations Exxon, GM, Ford, etc.
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Organization Design Ethnocentric Polycentric Geocentric Complexity of organization
Complex in home country, simple in subsidiaries Varied and independent Increasingly complex and interdependent
Authority; decision making High in headquarters Relatively low in headquarters
Aim for a collaborative approach between headquarters and subsidiaries Evaluation and control Home standards applied for persons and performance Determined locally Find standards which are universal and local Reward and punishments; incentives
High in headquarters, low in subsidiaries Wide variation; can be high or low reward for subsidiaries performance International and local executives rewarded for reaching local and worldwide objectives
Communication; Information flow High volume to subsidiaries orders, commands, advice
Little to and from headquarters, little between subsidiaries Both ways and between subsidiaries. Heads of subsidiaries part of management team
Identification Nationality of owner Nationality of host country Truly international company but identifying with national interest Perpetuation (recruiting, staffing, development) Recruit and develop people of home country for key positions everywhere in the world
Develop people of local nationality for key positions in their own country Develop best men everywhere in the world for key positions everywhere in the world
Three Types of Headquarters Orientation Toward Subsidiaries in an International Enterprise Dikutip dari Howard V. Perlmutter (2001)
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7. Need for a worldwide information system
5. Anticipated costs and risks of geocentrism
6. Global competition among international firms for scarce human and material resources
6. Need for recruitment of good men on a worldwide basis
6. Growing differences between the rich and poor countries
6. Nationalistic tendencies in staff
7. Major advances in integration of international transport& telecommunication
7. Host country belief that home country get disproportionate benefits of international firms profits
5. Risk diversification in having a worldwide production & distribution system
7. Increasing in mobility of staff
8. Regional supranational economic & political communities
8. Worldwide appeal of product
8. Home country political leaders’ attempts to control firm’s policy
8. Linguistic problems and different cultural backgrounds
9. Senior management’s long term commitment to geocentrism as
9. Centralization tendencies in headquarters
5. Lack of international monetary system
5. Growing world markets
Forces Toward Geocentrism Obstacles Toward Geocentrism Environmental Intra-Organizational Environmental Intra-Organizational
2. Political nationalism in host and home countries
1. Technological and managerial know-how increasing in availability in different countries
1. Desire to use human vs material resources optimally
1. Economic nationalism in host and home countries
1. Management inexperience in overseas market
2. International customers
2. Observed lowering of morale in affiliates of etnocentric company
2. Nation-centered reward and punishment structure
4. Resistance to letting foreigners into the power structure
3. Local customers demand for best product at fair price
3. Evidence of waste and duplication in polycentrism
3. Military secrecy associated with research in home country
3. Mutual distrust between home country people and foreign executives
4. Host country desire to increase balance of payment
4. Increasing awareness and respect for good men of other than home nationality
4. Distrust of big international firms by host country political leaders
International Executives View of Forces and Obstacles Toward Geocentrism
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Studi Kasus MNC (1)
What reasons lie behind the comparative success of McDonald’s franchise outlets over the company- owned ones?
In the franchise outlets, the franchisee invests more of his or her
own resources and has a more entrepreneurial approach to thebusiness. Managers of the company-owned outlets, by contrast,
have less sense of ownership and a lower level of entrepreneurial drive. This question can be broadened into a discussion of an entrepreneurial approach generally, which can bring in country differences in entrepreneurial environments.Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
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Studi Kasus MNC (2)
What were the causes of the crisis at Ericsson? Two causes are mentioned in direct connection with the crisis:
- Heavy investment in 3G licences left the large telecoms companies financially weakened, causing them to cut back in capital investment.
- Chinese manufacturers, with their lower costs and ability to undercut Ericsson on price, gained market share.
Another cause which emerges is Ericsson’s reliance on equipment manufacturing for revenues, which left it vulnerable to Chinese competitors.
Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
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Studi Kasus MNC (3)
How has PepsiCo’s diversification strategy proved to be advantageous in comparison to the strategy of Coca-
Cola?
PepsiCo has been able to add new businesses and products by its strategy of
diversification, allowing it to respond to changing consumer needs with a wide
portfolio of products. In particular, it has added bottled water, snack foods (through the acquisition of Frito-Lay and Quaker Oats), juices (through theacquisition of Tropicana), and the sports drink Gatorade (as part of the Quaker
Oats portfolio). These products reduce its dependence on traditional carbonated drinks. They also diversify the range of products for health- conscious consumers.
By comparison, Coke has remained more dependent on its flagship carbonated
drink, Coke. Although it has expanded into more markets internationally than PepsiCo, it has been slow to diversify into healthier products.Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
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Studi Kasus MNC (4)
What problems which have beset VW in global car markets?
VW is a mass-market car producer, and has found its competitiveness
slipping away in key markets, largely because of high costs in Germany, where it is based. It has traditionally been reluctant to use low-cost locations for components, unlike rival global carmakers.High wages and job protection in Germany have been priorities for the powerful trade union, IG Metall , which is influential on VW’s
supervisory board. In the US, VW’s sales slumped for several reasons:
the weakness of the US dollar, the lack of appealing new models and the unwillingness of the company to use local suppliers of components for its Mexican factory. In China, where VW was a market leader, competitive pressures have gathered strength, from both other western entrants and Chinese companies.Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
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Studi Kasus MNC (5)
What problems have Japanese companies had to overcome in order
to regain competitiveness in global markets?- The jobs-for-life guarantee – Japan’s large companies have prided themselves on their
employment system which guaranteed a job for life to permanent, full-time employees.
This was an important element in Japanese corporate culture, giving employees a strong sense of identity with the company, along with high levels of loyalty. Following decades of
rapid economic development, Japan went into a period of economic downturn in the
1990s, and in the same decade, Japan’s companies came under competitive pressures
from other East Asian economies which were catching up in terms of economicdevelopment. Although Japanese companies needed to restructure and abandon the
jobs-for-life policy, they were reluctant to take drastic steps to slim down workforces.
- Core technology and innovation capacities – Japan’s large companies were famous for
their innovations, but in embarking on joint ventures with companies in the rising economies of East Asia, lost control of some of their key innovations. Rethinking their
innovation strategies, involving decisions on what to keep in-house and where to seek
cooperative strategies, was part of the strategy to regain competitiveness.Sumber: Janet Morrison (2009). International Business: Challenges in a Changing World. Lecturer Manual
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Globalization and Business Network http://cambridgeforecast.files.wordpress.com/2008/06/globalcorp.gif
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Sumber: Globalization and The Rendezvous Of Civilizations, Cambridge Forecast Group
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is the ongoing process that deepens
and broadens the relationships and interdependence
among countries. International Business is a
mechanism to bring about globalization
Globalization
International business
International Business Environments and Operations, 13/e, Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
consists of all commercial transactions —including sales, investments, and transportation
—that take place
between two or more countries
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KOF Index of Globalization World Indonesia
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KOF Index of Globalization
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2012 KOF Index of Globalization
Indices and Variables WeightsA. Economic Globalization [36%]
Trade (percent of GDP) (21%) Foreign Direct Investment, stocks (percent of GDP) (28%) Portfolio Investment (percent of GDP) (24%) Income Payments to Foreign Nationals (percent of GDP) (27%)
Hidden Import Barriers (24%) Mean Tariff Rate (27%)
Taxes on International Trade (percent of current revenue) (26%)
Capital Account Restrictions (23%)Sistem Jaringan Bisnis International
2012 KOF Index of Globalization
Indices and Variables Weights
B. Social Globalization [37%]
i) Data on Personal Contact (34%) Telephone Traffic (25%) Transfers (percent of GDP) (4%) International Tourism (26%) Foreign Population (percent of total population) (21%) International letters (per capita) (25%) ii) Data on Information Flows (35%) Internet Users (per 1000 people) (33%) Television (per 1000 people) (36%) Trade in Newspapers (percent of GDP) (32%) iii) Data on Cultural Proximity (31%) Number of McDonald's Restaurants (per capita) (44%) Number of Ikea (per capita) (45%) Trade in books (percent of GDP) (11%)
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2012 KOF Index of Globalization
Indices and Variables Weights
C. Political Globalization [26%]
Embassies in Country (25%) Membership in International Organizations (28%)
Participation in U.N. Security Council Missions (22%)
International Treaties (25%)Sistem Jaringan Bisnis International
2012 KOF Index of Globalization
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2012 KOF Index of Globalization Indonesia Globalization Index: dari 208
87
Social Globalization: Political Globalization:
39
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What’s Wrong with Globalization
•Threats to national sovereignty
•Economic growth and environmental stress>
•Growing income inequality and personal stress
•Offshoring – the transferring of production abroad – is controversial in
terms of who benefits when costs are reduced and whether the process
exchanges good jobs for bad ones.
International Business Environments and Operations, 13/e, Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall http://www.absolutewealth.com/wp-content/uploads/2012/03/globalization.gif
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International Business Environments and Operations, 13/e, Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall International Business: Operations and Influences
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Export-import trade Foreign direct investment Licensing
Franchising Management contracts International Business, 7e. Czinkota, Ronkainen, and Moffett
Types of International Business
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Global Network Strategy © Professor Daniel F. Spulber
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Create network of customers, suppliers, partners
Use network to achieve global size and reach Use network to provide local customization
Network
relationships generate competitive advantage Global Network Strategy
© Professor Daniel F. Spulber
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Physical networks:
- Communications: Wired and mobile telephone systems
- Internet • Transportation: Railroads, Airlines, Shipping, Intermodal systems
- Energy: Oil and natural gas pipelines, Electric power transmission and distribution
- Logistics: Postal systems, Wholesale and retail distribution
Business networks:
Manufacturing, services, distribution, technology,
social networks (trust and information sharing)
© Professor Daniel F. SpulberSistem Jaringan Bisnis International
The Global Factory
- Hong Kong manufacturers own or contract with more than 40,000 factories in South China employing four million workers
- To take advantage of specialized sources in different countries - best quality
- To take advantage of cost variations across countries - least cost sources
- To take advantage of location - minimize transport-costs, transaction costs, and tariffs
© Professor Daniel F. Spulber
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The Global Store
Examples: Dairy Farm, Shell, Zara Growth: access to additional customers Develop global brands Coordination economies from centralized regional warehouses and production facilities
- – Provide access to sourcing network Enhances value of supplier contacts by expansion of distribution Lower transaction costs for suppliers who deal with fewer distributors Lower risk from pooling demand fluctuations
© Professor Daniel F. Spulber
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Partner Networks scale
- Achieve global
focus on their region
- Members
avoiding duplication of
- Reduce competition by facilities and operations on ownership
- Avoid government restrictions
and market dominance setting
- Technology standard
production
- Complements in
demand (game players and games)
- Complements in
© Professor Daniel F. Spulber
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Partner Networks
- Provide 60% of all transatlantic services
- "Alliance that Revolves Around You"
- ONEWORLD members: Iberia, Cathay Pacific, Quantas, Finnair, Aer Lingus, Lan Airlines (Chile)
- The airlines cooperate on scheduling and ticketing, frequent flyer programs, airport clubs, baggage handling, customer service
• Competitive response to the STAR ALLIANCE from United, Lufthansa,
SAS, Air Canada and Thai Airways (210,000 Employees, flights to 578 cities in 106 countries)- 600 destinations in 135 countries around the world, operating over 8000 flights daily, 230 million passengers/year
© Professor Daniel F. Spulber
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Franchise Networks
Advantages
- Rapid international growth
- Local ownership
- Local management
- Lower capital outlays
Disadvantages
- Search cost of finding franchise owners overseas
- Costs of monitoring performance across borders
- Transaction costs of forming franchise contracts in other country remains
© Professor Daniel F. Spulber
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Global Intermediary Strategy
Matchmaker
Brings buyers and sellers together across international borders
Market maker
Creates and operates markets that cross international borders
Agent
Provide representation in other countries © Professor Daniel F. Spulber
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Matchmaker
- Bridge international differences in goods and services, business practices, law and regulations, currencies, languages, time zones
- Provide value-added activities
- Representative agents in sales, distribution, purchasing, financing, contracting, and supply chain managers
- Match offers to buyer and seller needs: product features, location, time.
- Avoids costs of search for buyers and sellers
- Reduces buyer and seller risks from dealing with few trading partners,
© Professor Daniel F. Spulber
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Matchmaker
: Seller speaks : Seller is in Japan, buyer is
- Language
- Time
Chinese, buyer speaks Spanish, in Mexico, intermediary operates
intermediary speaks both in both time zones : Seller wants pesos, : Seller in Germany- Currency
- Knowledge
buyer has dollars, intermediary knows production technology,
changes dollars to pesos buyer in US knows preferences of
US customers, intermediary combines knowledge of supply: Seller is in Thailand,
- Distance
and demand across borders buyer is in Brazil, intermediary arranges transportation
: Seller and buyer are in
- Culture
different countries, intermediary : Buyer and seller both trust
- Trust
adapts products, services, the intermediary without having contract terms and negotiation to dealt directly with each other diverse social customs
© Professor Daniel F. Spulber
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Mitsui © Professor Daniel F. Spulber
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Market Maker
The global market maker aggregates demand across countries and aggregates supply across countries
Cemex Mittal Cargill BP Amoco eBay
© Professor Daniel F. Spulber
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Ingram Micro
The leading international wholesaler of technology products and services
- Wholesales 280,000 computer hardware and software products
- – think of number of prices!
- Sources in US and many other countries from 1,700 manufacturers
- Serves 175,000 resellers in more than 100 countries
- Serves through operations and affiliates in 35 countries
- Establishes prices, coordinates sales and purchases, clears the market, allocates products
© Professor Daniel F. Spulber
Market maker
© Professor Daniel F. SpulberSistem Jaringan Bisnis International
- Creates and operates international markets
- Chooses prices, conveys informa>Adjusts sourcing and serving to clear markets – avoids efficiency losses from market imbalances
- Provides immediacy: ready to buy and >Allocates goods and services across countries
- Gathers and aggregates information about customers and suppliers on an international level, inventories, orders, and produc
- Applies IT to international coordination
- Earns returns from international risk pooling
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Agents
(EMC) represents sellers,- Export Marketing Company
can be broker or dealer, bears risks, arranges resale, transportation, credit (ETC) represents buyers,
- Export Trading Company
handles imports, usually takes title to goods
• Act as international agent: provide expertise in negotiation,
market knowledge- Provide trust to buyers and sellers
- Allows principal to delegate authority for distant transactions
- Provides market expertise, often to smaller firms
© Professor Daniel F. Spulber
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Ethics in International Business Prof. Robert Chapman Wood, San Jose State University, http://forum.belmont.edu/business/category/business-ethics/
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Business ethics are principles of right or wrong governing the conduct of business people
The text says, “ the accepted principles of right and wrong
” But there are many differences of opinion among highly ethical businesspeople
Prof. Robert Chapman Wood, San Jose State University,
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Prof. Robert Chapman Wood, San Jose State University, The world has many different
ethical systems
mostly derived from different religions
Different systems can lead to different
opinions about what is ethical
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Prof. Robert Chapman Wood, San Jose State University,
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Ethical Issues in International Business
Prof. Robert Chapman Wood, San Jose State University,
Many ethical issues and dilemmas are rooted in differences in political systems, law, economic development, and culture Some key ethical issues in international business
… Employment Practices
When work conditions in a host nation are clearly inferior
to those in a multinational’s home nation,
what standards should be applied ?
How much divergence is acceptable?
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- - freedom of speech
- freedom of association
- - freedom of assembly - freedom from political repression
Prof. Robert Chapman Wood, San Jose State University, Human Rights
Basic rights are not respected in many nations ‘What is the responsibility of a foreign firm in a country where human rights are trampled?’
Environmental Pollution Environmental regulations (or enforcement) in host nations may be inferior to those at home
Multinationals can produce more pollution than at home The tragedy of the commons occurs - The water in Mekong River
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Corruption
International businesses can, and have, gained economic advantages by making payments
to government officials
US passed the Foreign Corrupt Practices Act
Organization for Economic Cooperation and Development (OECD) adopted the Convention
on Combating Bribery of Foreign Public Officials in International Business Transactions
Social responsibility
Multinational firms have power, wealth from control over
resources and ability to move production
Moral philosophers argue that with power comes the
responsibility to give something back to the societies that
enable them to prosper
Advocates argue that businesses need to recognize their noblesse oblige (benevolent behavior that is the responsibility of successful people and enterprises)
Prof. Robert Chapman Wood, San Jose State University,
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Prof. Robert Chapman Wood, San Jose State University,